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paragraph (1) or (2) of section 212. Sec. 183(c). Section 162
allows a deduction for all the ordinary and necessary expenses
paid or incurred in carrying on a trade or business. Section 212
allows a deduction for all the ordinary and necessary expenses
paid or incurred for the production or collection of income, or
for the management, conservation, or maintenance of property held
for the production of income. The profit standards applicable to
section 212 are the same as those applicable to section 162. See
Antonides v. Commissioner, 893 F.2d 656, 659 (4th Cir. 1990),
affg. 91 T.C. 686 (1988).
For a taxpayer to deduct expenses of an activity pursuant to
section 162, the taxpayer must show that he or she engaged in the
activity with an actual and honest objective of making a profit.
See sec. 183; Ronnen v. Commissioner, 90 T.C. 74, 91 (1988);
Fuchs v. Commissioner, 83 T.C. 79, 97-98 (1984); Dreicer v.
Commissioner, 78 T.C. 642, 645 (1982), affd. without opinion 702
F.2d 1205 (D.C. Cir. 1983); sec. 1.183-2(a), Income Tax Regs.
Although a reasonable expectation of profit is not required, the
taxpayer's profit objective must be bona fide. See Hulter v.
Commissioner, 91 T.C. 371, 393 (1988); Beck v. Commissioner, 85
T.C. 557, 569 (1985). Whether a taxpayer had an actual and
honest profit objective is a question of fact to be resolved from
all relevant facts and circumstances. See Carter v.
Commissioner, 645 F.2d 784, 786 (9th Cir. 1981), affg. T.C. Memo.
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